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PENN WEST PETROLEUM $21.63 (Toronto symbol PWT; Shares outstanding: 469.4 million; Market cap: $10.2 billion; TSINetwork Rating: Average; Dividend yield: 5.0%; www.pennwest.com) has raised its production by over 56% over the last five years. It is now one of North America’s largest oil and gas producers.

The company has made big investments in its operations in order to boost its production. Even so, its $2.9 billion of long-term debt is a reasonable 28.4% of its market cap. It has also lowered its debt from $3.5 billion at the start of 2010.

Penn West converted from a trust to a corporation on January 1, 2011. However, it has $7.0 billion of tax pools that it is using to offset the new tax. That’s letting it maintain its $1.08-a-share annual payout, which yields 5.0%. As well, the payout (like all dividends paid by converted trusts) is now eligible for the dividend tax credit if you hold your shares outside an RRSP.

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PEYTO EXPLORATION & DEVELOPMENT CORP. $18.87 (Toronto symbol PEY; Shares outstanding: 133.1 million; Market cap: $2.5 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.8%; www.peyto.com) produces and explores for oil and natural gas in Alberta. In response to Ottawa’s income trust tax, Peyto converted from a trust to a dividend paying stock on December 31, 2010.

Peyto’s average daily production of 36,390 barrels of oil equivalent (including natural gas) is 89% gas and 11% oil.

In the three months ended September 30, 2011, Peyto’s cash flow rose 34.8%, to $0.62 a unit from $0.46 a year earlier. The shares trade at 7.1 times the company’s forecast 2012 cash flow of $2.65 a share. Peyto’s long-term debt of $490 million is a low 19.6% of its $2.5-billion market cap.

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PEYTO EXPLORATION & DEVELOPMENT CORP. $18.87 (Toronto symbol PEY; Shares outstanding: 133.1 million; Market cap: $2.5 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.8%; www.peyto.com) produces and explores for oil and natural gas in Alberta. In response to Ottawa’s income trust tax, Peyto converted from a trust to a dividend paying stock on December 31, 2010. Peyto’s average daily production of 36,390 barrels of oil equivalent (including natural gas) is 89% gas and 11% oil. In the three months ended September 30, 2011, Peyto’s cash flow rose 34.8%, to $0.62 a unit from $0.46 a year earlier. The shares trade at 7.1 times the company’s forecast 2012 cash flow of $2.65 a share. Peyto’s long-term debt of $490 million is a low 19.6% of its $2.5-billion market cap....

Ottawa’s tax on income trust distributions took effect over a year ago, on January 1, 2011. Most trusts have already converted to corporations in response. Real estate investment trusts (REITs) are exempt, however, so they will remain as trusts. All but one of our trust recommendations have converted. We still like the long-term outlook for all these picks, and we see them as buys. All of our REIT recommendations remain buys, as well....

Inter Pipeline Fund, $18.75, symbol IPL.UN on Toronto (Units outstanding: 264.1 million; Market cap: $5.0 billion; www.interpipelinefund.com), transports, stores, markets and processes oil and natural gas. The fund has three divisions: pipelines transports 35% of Canadian oil sands production and 15% of western Canadian conventional crude oil; extraction processes 40% of Alberta’s exported natural gas into natural gas liquids; and the storage division, which operates under the Simon Storage and TLG banners. In the three months ended September 30, 2011, Inter Pipeline’s revenue rose 30.4%, to $302.1 million from $231.7 million a year earlier. Cash flow per unit jumped 43.3%, to $0.43 from $0.30. That’s mainly because the company’s pipelines shipped 993,300 barrels a day in the quarter, up 24.6% from 797,300 barrels a year earlier. The increased volumes came mostly from a $1.8-billion expansion of the fund’s Corridor pipeline, which was completed in January 2011....

CRESCENT POINT ENERGY CORP. $44.35 (Toronto symbol CPG; Shares outstanding: 277.9 million; Market cap: $12.3 billion; TSINetwork Rating: Extra Risk; Dividend yield: 6.2%; www.crescentpointenergy.com) produces oil and natural gas in western Canada. Its production is weighted 90% toward oil and 10% to gas. The company continues to focus on its Bakken light-oil development in southeastern Saskatchewan. For all of 2011, Crescent Point will likely spend at least $1.1 billion on exploration at Bakken. That should rise even higher in 2012. In the three months ended September 30, 2011, Crescent Point’s cash flow per share rose 19.8%, to $1.09 from $0.91....

PEYTO EXPLORATION & DEVELOPMENT CORP. (Toronto symbol PEY; www.peyto.com) continues to generate higher cash flow. And it’s reinvesting that cash flow to expand production in order to deliver greater returns for its shareholders. The company produces and explores for oil and natural gas in Alberta. Peyto’s average daily production of 34,443 barrels of oil equivalent (including natural gas) is weighted 89% toward gas and 11% to oil....

Pat McKeough responds to many personal questions on stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on a selection of the most intriguing questions of the past week go out to all Inner Circle members. And every Friday, we offer you one of the highlights from these Q&A sessions. This week, an Inner Circle member asked Pat about one of Canada’s major mining stocks. Labrador Iron Ore Royalty has quietly built a position as a world leader in iron ore. Now it faces several challenges in today’s volatile commodity markets....

PEYTO EXPLORATION & DEVELOPMENT CORP. $21.98 (Toronto symbol PEY; Shares outstanding: 133.1 million; Market cap: $2.9 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.3%; www.peyto.com) produces and explores for oil and natural gas in Alberta. The company converted from an income trust to a dividend-paying stock on December 31, 2010. Peyto’s average daily production of 34,443 barrels of oil equivalent (including natural gas) is weighted 89% toward gas and 11% to oil. In the three months ended June 30, 2011, Peyto’s cash flow rose 31.8%, to $0.58 a unit from $0.44 a year earlier. The shares trade at 9.5 times the company’s forecast 2011 cash flow of $2.32 a share. Peyto’s long-term debt of $455 million is a low 15.7% of its $2.9-billion market cap....

Labrador Iron Mines Holdings Ltd., $6.90, symbol LIM on Toronto (Shares outstanding: 50.8 million; Market cap: $350.5 million; www.labradorironmines.ca), has restarted its iron ore projects in northwestern Labrador and northeastern Quebec. The company is now shipping ore to China. Iron Ore Company of Canada markets and ships the ore under an agreement with Labrador Iron Mines. The company’s projects consist of 20 deposits, containing about 166 million tonnes of iron ore. There is little processing required, and all the ore is loaded onto trains and shipped straight to the port town of Sept-Iles, Quebec. The properties are part of the historic Schefferville mining district, where Iron Ore Company of Canada operated from 1954 to 1982. The company holds cash of $87.5 million, or $1.62 a share, and has no debt. That gives it the funds to keep expanding its mining operations and exploring its properties....